IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v66y2020i8p3677-3698.html
   My bibliography  Save this article

The Friday Effect: Firm Lobbying, the Timing of Drug Safety Alerts, and Drug Side Effects

Author

Listed:
  • Luis Diestre

    (Department of Strategy, IE Business School, 28006 Madrid, Spain)

  • Benjamin Barber

    (Department of Strategy, IE Business School, 28006 Madrid, Spain)

  • Juan Santaló

    (Department of Strategy, IE Business School, 28006 Madrid, Spain)

Abstract

Safety alerts are announcements made by health regulators warning patients and doctors about new drug-related side effects. However, not all safety alerts are equally effective. We provide evidence that the day of the week on which the safety alerts are announced explains differences in safety alert impact. Specifically, we show that safety alerts announced on Fridays are less broadly diffused: they are shared 34% less on social media, mentioned in 23% to 66% fewer news articles, and are 12% to 51% less likely to receive any news coverage at all. As a consequence of this, we propose Friday alerts are less effective in reducing drug-related side effects. We find that moving a Friday alert to any other weekday would reduce all drug-related side effects by 9% to 12%, serious drug-related complications by 6% to 15%, and drug-related deaths by 22% to 36%. This problem is particularly important because Friday was the most frequent weekday for safety alert announcements from 1999 to 2016. We show that this greater prevalence of Friday alerts might not be random: firms that lobbied the U.S. Food and Drug Administration in the past are 49% to 56% more likely to have safety alerts announced on Fridays.

Suggested Citation

  • Luis Diestre & Benjamin Barber & Juan Santaló, 2020. "The Friday Effect: Firm Lobbying, the Timing of Drug Safety Alerts, and Drug Side Effects," Management Science, INFORMS, vol. 66(8), pages 3677-3698, August.
    • Handle: RePEc:inm:ormnsc:v:66:y:2020:i:8:p:3677-3698
    DOI: 10.1287/mnsc.2019.3386
    as

    Download full text from publisher

    File URL: https://doi.org/10.1287/mnsc.2019.3386
    Download Restriction: no
    File URL: https://libkey.io/10.1287/mnsc.2019.3386?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Hainmueller, Jens, 2012. "Entropy Balancing for Causal Effects: A Multivariate Reweighting Method to Produce Balanced Samples in Observational Studies," Political Analysis, Cambridge University Press, vol. 20(1), pages 25-46, January.
    2. Dowdell, Thomas D. & Govindaraj, Suresh & Jain, Prem C., 1992. "The Tylenol Incident, Ensuing Regulation, and Stock Prices," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 27(2), pages 283-301, June.
    3. William Ocasio, 2011. "Attention to Attention," Organization Science, INFORMS, vol. 22(5), pages 1286-1296, October.
    4. Eng Cheah & Wen Chan & Corinne Chieng, 2007. "The Corporate Social Responsibility of Pharmaceutical Product Recalls: An Empirical Examination of U.S. and U.K. Markets," Journal of Business Ethics, Springer, vol. 76(4), pages 427-449, December.
    5. Bennet A. Zelner, 2009. "Using simulation to interpret results from logit, probit, and other nonlinear models," Strategic Management Journal, Wiley Blackwell, vol. 30(12), pages 1335-1348, December.
    6. Parvez Ahmed & John Gardella & Sudhir Nanda, 2002. "Wealth Effect of Drug Withdrawals on Firms and Their Competitors," Financial Management, Financial Management Association, vol. 31(3), Fall.
    7. Stefano Dellavigna & Joshua M. Pollet, 2009. "Investor Inattention and Friday Earnings Announcements," Journal of Finance, American Finance Association, vol. 64(2), pages 709-749, April.
    8. Michaely, Roni & Rubin, Amir & Vedrashko, Alexander, 2016. "Further evidence on the strategic timing of earnings news: Joint analysis of weekdays and times of day," Journal of Accounting and Economics, Elsevier, vol. 62(1), pages 24-45.
    9. David Hirshleifer & Sonya Seongyeon Lim & Siew Hong Teoh, 2009. "Driven to Distraction: Extraneous Events and Underreaction to Earnings News," Journal of Finance, American Finance Association, vol. 64(5), pages 2289-2325, October.
    10. Andrew J. Hoffman & William Ocasio, 2001. "Not All Events Are Attended Equally: Toward a Middle-Range Theory of Industry Attention to External Events," Organization Science, INFORMS, vol. 12(4), pages 414-434, August.
    11. David Deephouse & Pursey Heugens, 2009. "Linking Social Issues to Organizational Impact: The Role of Infomediaries and the Infomediary Process," Journal of Business Ethics, Springer, vol. 86(4), pages 541-553, June.
    12. Mariesa A. Herrmann & Jonah E. Rockoff, 2012. "Worker Absence and Productivity: Evidence from Teaching," Journal of Labor Economics, University of Chicago Press, vol. 30(4), pages 749-782.
    13. William Ocasio, 1997. "Towards An Attention‐Based View Of The Firm," Strategic Management Journal, Wiley Blackwell, vol. 18(S1), pages 187-206, July.
    14. Peter M. Madsen & Zachariah J. Rodgers, 2015. "Looking good by doing good: The antecedents and consequences of stakeholder attention to corporate disaster relief," Strategic Management Journal, Wiley Blackwell, vol. 36(5), pages 776-794, May.
    15. Daniel Carpenter & Jacqueline Chattopadhyay & Susan Moffitt & Clayton Nall, 2012. "The Complications of Controlling Agency Time Discretion: FDA Review Deadlines and Postmarket Drug Safety," American Journal of Political Science, John Wiley & Sons, vol. 56(1), pages 98-114, January.
    16. Raegen T. MILLER & Richard J. MURNANE & John B. WILLETT, 2008. "Do worker absences affect productivity? The case of teachers," International Labour Review, International Labour Organization, vol. 147(1), pages 71-89, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yipu Deng & Jinyang Zheng & Warut Khern-am-nuai & Karthik Kannan, 2022. "More than the Quantity: The Value of Editorial Reviews for a User-Generated Content Platform," Management Science, INFORMS, vol. 68(9), pages 6865-6888, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Datta, Subhadeep & Mukherjee, Sourjo, 2022. "In families we trust: Family firm branding and consumer’s reaction to product harm crisis," Journal of Business Research, Elsevier, vol. 151(C), pages 257-268.
    2. Diestre, Luis, 2018. "Safety crises and R&D outsourcing alliances: Which governance mode minimizes negative spillovers?," Research Policy, Elsevier, vol. 47(10), pages 1904-1917.
    3. David Maslach & Oana Branzei & Claus Rerup & Mark J. Zbaracki, 2018. "Noise as Signal in Learning from Rare Events," Organization Science, INFORMS, vol. 29(2), pages 225-246, April.
    4. Jim Andersén, 2023. "Green resource orchestration: A critical appraisal of the use of resource orchestration in environmental management research, and a research agenda for future study," Business Strategy and the Environment, Wiley Blackwell, vol. 32(8), pages 5506-5520, December.
    5. Peter M. Madsen & Zachariah J. Rodgers, 2015. "Looking good by doing good: The antecedents and consequences of stakeholder attention to corporate disaster relief," Strategic Management Journal, Wiley Blackwell, vol. 36(5), pages 776-794, May.
    6. repec:grz:wpsses:2020-04 is not listed on IDEAS
    7. Hoppmann, Joern & Wu, Geng & Johnson, Jillian, 2021. "The impact of demand-pull and technology-push policies on firms’ knowledge search," Technological Forecasting and Social Change, Elsevier, vol. 170(C).
    8. He, Wen & Li, Yan, 2020. "Comparing with the average: Reference points and market reactions to above-average earnings surprises," Journal of Banking & Finance, Elsevier, vol. 117(C).
    9. Aytekin Ertan & Stephen A. Karolyi & Peter W. Kelly & Robert Stoumbos, 2022. "Earnings announcement return extrapolation," Review of Accounting Studies, Springer, vol. 27(1), pages 185-230, March.
    10. Suvrat S. Dhanorkar & Enno Siemsen & Kevin W. Linderman, 2018. "Promoting Change from the Outside: Directing Managerial Attention in the Implementation of Environmental Improvements," Management Science, INFORMS, vol. 64(6), pages 2535-2556, June.
    11. Rodolphe Durand & Panayiotis (Panikos) Georgallis, 2018. "Differential Firm Commitment to Industries Supported by Social Movement Organizations," Organization Science, INFORMS, vol. 29(1), pages 154-171, February.
    12. Zhang, Sijia & Gregoriou, Andros & Wu, He, 2024. "Asymmetric post earnings announcement drift and order flow imbalance: The impact on stock market returns," International Review of Financial Analysis, Elsevier, vol. 94(C).
    13. Doron Israeli & Ron Kasznik & Suhas A. Sridharan, 2022. "Unexpected distractions and investor attention to corporate announcements," Review of Accounting Studies, Springer, vol. 27(2), pages 477-518, June.
    14. Drummond, Philip A., 2023. "Market quality surrounding anticipated distraction events: Evidence from the FIFA World Cup," Journal of Financial Markets, Elsevier, vol. 63(C).
    15. Eran Rubin & Amir Rubin, 2021. "On the economic effects of the text completion interface: empirical analysis of financial markets," Electronic Markets, Springer;IIM University of St. Gallen, vol. 31(3), pages 717-735, September.
    16. Blankespoor, Elizabeth & deHaan, Ed & Marinovic, Iván, 2020. "Disclosure processing costs, investors’ information choice, and equity market outcomes: A review," Journal of Accounting and Economics, Elsevier, vol. 70(2).
    17. Shinkle, George A. & Hodgkinson, Gerard P. & Gary, Michael Shayne, 2021. "Government policy changes and organizational goal setting: Extensions to the behavioral theory of the firm," Journal of Business Research, Elsevier, vol. 129(C), pages 406-417.
    18. Adra, Samer & Barbopoulos, Leonidas G., 2018. "The valuation effects of investor attention in stock-financed acquisitions," Journal of Empirical Finance, Elsevier, vol. 45(C), pages 108-125.
    19. Li, Tao & Xiang, Cheng & Liu, Zhuo & Cai, Wenwu, 2020. "Annual report disclosure timing and stock price crash risk," Pacific-Basin Finance Journal, Elsevier, vol. 62(C).
    20. Wang, Hailong & Hu, Duni, 2024. "Heterogeneous beliefs with information processing capacity constraints and asset pricing in a monetary economy," The North American Journal of Economics and Finance, Elsevier, vol. 72(C).
    21. Andrei, Daniel & Friedman, Henry & Ozel, N. Bugra, 2023. "Economic uncertainty and investor attention," Journal of Financial Economics, Elsevier, vol. 149(2), pages 179-217.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:66:y:2020:i:8:p:3677-3698. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.